[Federal Register: April 18, 2005 (Volume 70, Number 73)]
[Notices]
[Page 20107-20110]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr18ap05-39]
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CONSUMER PRODUCT SAFETY COMMISSION
[CPSC Docket No. 05-C0008]
Nautilus, Inc., Provisional Acceptance of a Settlement Agreement
and Order
AGENCY: Consumer Product Safety Commission.
ACTION: Notice.
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SUMMARY: It is the policy of the Commission to publish settlements
which it provisionally accepts under the Consumer Product Safety Act in
the Federal Register in accordance with the terms of 16 CFR 1118.20(e).
Published below is a provisionally-accepted Settlement Agreement with
Nautilus, Inc., containing a civil penalty of $950,000.00.
DATES: Any interested person may ask the Commission not to accept this
agreement or otherwise comment on its contents by filing a written
request with the Office of the Secretary by May 3, 2005.
ADDRESSES: Persons wishing to comment on this Settlement Agreement
should send written comments to the Comment 05-C0008, Office of the
Secretary, Consumer Product Safety Commission, Washington, DC 20207.
FOR FURTHER INFORMATION CONTACT: Dennis C. Kacoyanis, Trial Attorney,
Office of Compliance, Consumer Product Safety Commission, Washington,
DC 20207; telephone (301) 504-7587.
SUPPLEMENTARY INFORMATION: The text of the Agreement and Order appears
below.
Dated: April 4, 2005.
Todd A. Stevenson,
Secretary.
In the Matter of Nautilus, Inc.
Settlement Agreement and Order
1. This Settlement Agreement is made by and between the staff
(``the staff'') of
[[Page 20108]]
the U.S. Consumer Product Safety Commission (``the Commission'') and
Nautilus, Inc. (``Nautilus'' or ``Respondent''), a corporation, in
accordance with 16 CFR 1118.20 of the Commission's Procedures for
Investigations, Inspections, and Inquiries under the Consumer Product
Safety Act (``CPSA''). This Settlement Agreement and the incorporated
and attached Order settle the staff's allegations set forth below.
I. The Parties
2. The Commission is an independent federal regulatory agency
responsible for the enforcement of the Consumer Product Safety Act, 15
U.S.C. 2051 et seq.
3. Nautilus is a corporation organized and existing under the laws
of the State of Washington with its principal corporate offices located
at 1400 NE 136th Avenue, Vancouver, WA 98661. Nautilus manufactures and
sells, either through retailers or direct sales methods, such as
infomercials, health and fitness products under several brand names,
including Bowflex.
II. Allegations of the Staff
A. Bowflex Power Pro Fitness Machines-Backboard Bench
4. Between January 1995 and December 2003, Nautilus manufactured
and/or sold in commerce nationwide approximately 420,000 Bowflex Power
Pro Fitness Machines equipped with a Lat Tower and a backboard bench.
5. The Bowflex Power Pro Fitness Machine is sold to, and/or is used
by, consumers in or around a permanent or temporary household or
residence, a school, in recreation, or otherwise and is, therefore, a
``consumer product'' as defined in section 3(a)(1) of the Consumer
Product Safety Act (CPSA), 15 U.S.C. 2052(a)(1). Respondent is a
``manufacturer'' and ``retailer'' of the Bowflex Power Pro exercise
equipment, which is ``distributed in commerce'' as those terms are
defined in sections 3(a)(4), (6), (11), and (12) of the CPSA, 15 U.S.C.
2052(a)(4), (6), (11), and (12).
6. The Bowflex Power Pro Fitness Machine is an item of exercise
equipment that uses 10 to 14 resistance rods, a pulley system, and a
backboard bench. The Bowflex Power Pro's backboard bench can break
apart and collapse unexpectedly during normal and foreseeable use of
the exercise equipment. If a backboard bench breaks apart and collapses
unexpectedly during use, it may cause the consumer to fall and suffer
serious injuries.
7. Between December 1998 and July 2002, Nautilus learned of about
25 reports of consumers sustaining injuries when the Power Pro's
backboard bench broke apart and collapsed unexpectedly during use of
the exercise equipment. Nautilus knew of lacerations requiring sutures,
back, neck, and spinal injuries.
8. In June 2000, after learning of about eight reported incidents
of the Bowflex Power Pro Fitness Machine's backboard bench breaking
apart and collapsing unexpectedly during use, Nautilus reinforced the
backboard bench by adding a steel plate.
9. On July 1, 2002, the Commission's National Injury Information
Clearinghouse forwarded to Nautilus an in-depth investigation report.
In this report, a consumer alleged the backboard bench broke apart and
collapsed unexpectedly during use. The consumer suffered injuries to
his back, tongue, and teeth. In its letter, the Clearinghouse advised
Nautilus about the CPSA's reporting requirement and the procedures for
submitting a report to the Commission. At the time it received this
letter from the Clearinghouse, Nautilus knew of at least 27 incident
reports of which 25 claimed injuries resulting from the Bowflex Power
Pro's backboard bench collapsing and breaking apart unexpectedly during
use, but did not report the defect or risk to the Commission.
10. As the facts described in paragraphs 4 through 9 above show,
Nautilus obtained information which reasonably supported the conclusion
that the Bowflex Power Pro exercise equipment described in paragraph 4
above contained a defect which could create a substantial product
hazard or created an unreasonable risk of serious injury or death, but
failed to report such information to the Commission as required by
sections 15(b)(2) and (3) of the CPSA, 15 U.S.C. 2064(b)(2) and (3).
11. By failing to furnish information as required by section 15(b)
of the CPSA, 15 U.S.C. 2064(b), Nautilus violated section 19(a)(4) of
the CPSA, 15 U.S.C. 2068(a)(4).
12. Nautilus committed this failure to timely report to the
Commission ``knowingly'' as the term ``knowingly'' is defined in
section 20(d) of the CPSA, 15 U.S.C. 2069(d), subjecting Nautilus to
civil penalties under section 20 of the CPSA, 15 U.S.C. 2069.
B. Bowflex Power Pro and Bowflex Ultimate Fitness Machines-Seat Pin
13. Between January 1995 to April 2004, Bowflex manufactured and/or
sold in commerce nationwide approximately 420,000 Bowflex Power Pro
Fitness Machines with a Lat Tower and approximately 102,000 Bowflex
Ultimate Fitness Machines, respectively. Each of these items of
equipment is equipped with a seat pin that is used to reposition the
seat for different types of exercises.
14. The Bowflex Power Pro and Bowflex Ultimate Fitness Machines are
sold to, and/or are used by, consumers in or around a permanent or
temporary household or residence, a school, in recreation, or otherwise
and are, therefore, ``consumer products'' as defined in section 3(a)(1)
of the Consumer Product Safety Act (CPSA), 15 U.S.C. 2052(a)(1).
Respondent is a ``manufacturer'' and ``retailer'' of the Bowflex Power
Pro and Bowflex Ultimate, which are ``distributed in commerce'' as
those terms are defined in sections 3(a)(4), (6), (11), and (12) of the
CPSA, 15 U.S.C. 2052(a)(4), (6), (11), and (12).
15. The Bowflex Power Pro and Ultimate Fitness Machines are items
of exercise equipment with resistance rods, pull down pulleys, and a
bench. The seat pins on the Bowflex Power and Ultimate Fitness Machines
can disengage or break unexpectedly during normal and foreseeable use.
If a seat pin disengages or breaks unexpectedly during use, it may
cause the seat to move suddenly and cause the consumer to fall and
suffer serious injuries.
16. Between August 5, 2002, and April 16, 2004, the date Nautilus
submitted a full report to the Commission, Nautilus learned of about 32
reports of consumers sustaining injuries when the Bowflex Power Pro's
and Ultimate's seat pins disengaged or broke unexpectedly during use.
Injuries reported included a blood clot, a laceration requiring
sutures, pulled ligaments, and back, disc, and neck injuries.
17. As a result of the Commission's investigation of the Power
Pro's backboard bench, Nautilus reviewed its products and reported on
April 16, 2004, the defect associated with the fitness machines
identified in paragraph 13 above.
18. As the facts described in paragraphs 13 through 17 above show,
Nautilus obtained information which reasonably supported the conclusion
that the Bowflex Power Pro and Ultimate Fitness Machine described in
paragraph 13 above contained a defect which could create a substantial
product hazard or created an unreasonable risk of serious injury or
death, but failed to report such information in a timely manner to the
Commission as required by sections 15(b)(2) and (3) of the CPSA, 15
U.S.C. 2064(b)(2) and (3).
19. By failing to furnish the information to the Commission in a
[[Page 20109]]
timely manner as required by section 15(b) of the CPSA, 15 U.S.C.
2064(b), Nautilus violated section 19(a)(4) of the CPSA, 15 U.S.C.
2068(a)(4).
20. Nautilus committed this failure to timely report to the
Commission ``knowingly'' as the term ``knowingly'' is defined in
section 20(d) of the CPSA, 15 U.S.C. 2069(d), thus subjecting Nautilus
to civil penalties under section 20 of the CPSA, 15 U.S.C. 2069.
C. Bowflex Power Pro Fitness Machine-Incline Support Bracket
21. Between January 1995 and April 2004, Nautilus manufactured and/
or sold in commerce nationwide approximately 260,000 Bowflex Power Pro
exercise equipment without a Lat Tower, which were equipped with an
incline support bracket.
22. The Bowflex Power Pro Fitness Machine is sold to, and/or is
used by, consumers in or around a permanent or temporary household or
residence, a school, in recreation, or otherwise and is, therefore a
``consumer product'' as defined in section 3(a)(1) of the Consumer
Product Safety Act (CPSA), 15 U.S.C. 2052(a)(1). Respondent is a
``manufacturer'' and ``retailer'' of the Bowflex Power Pro Fitness
Machine, which is ``distributed in commerce'' as those terms are
defined in sections 3(a)(4), (6), (11), and (12) of the CPSA, 15 U.S.C.
2052(a)(4), (6), (11), and (12).
23. The incline support bracket of the Bowflex Power Pro Fitness
Machine can break or bend unexpectedly during normal and foreseeable
use of the exercise equipment. If an incline support bracket breaks or
bends unexpectedly during use, it may cause the consumer to fall and
suffer serious injuries.
24. Between May 7, 2001, and April 16, 2004, the date Nautilus
submitted a full report to the Commission, Nautilus was aware of
approximately 28 reports of consumers sustaining injuries when the
include support bracket of the Bowflex Power Pro Fitness Machine broke
or bent unexpectedly during use of the exercise equipment. Injuries
reported included lacerations requiring sutures, fractures, back pain,
and numbness. Nautilus reported after completing the product review
described in paragraph 17 above.
25. In August 2002, Nautilus made a running change to the material
used in the incline support bracket to make it more robust and
resistant to accidental breakage, but did not report the defect or risk
to the Commission.
26. As the facts described in paragraphs 21 through 25 above show,
Nautilus obtained information which reasonably supported the conclusion
that the Bowflex Power Pro Fitness Machine described in paragraph 21
above contained a defect which could create a substantial product
hazard or created an unreasonable risk of serious injury or death, but
failed to report such information in a timely manner to the Commission
as required by sections 15(b)(2) and (3) of the CPSA, 15 U.S.C.
2064(b)(2) and (3).
27. By failing to furnish the information to the Commission in a
timely manner as required by section 15(b) of the CPSA, 15 U.S.C.
2064(b), Nautilus violated section 19(a)(4) of the CPSA, 15 U.S.C.
2068(a)(4).
28. Nautilus committed this failure to timely report to the
Commission ``knowingly'' as the term ``knowingly'' is defined in
section 20(d) of the CPSA, 15 U.S.C. 2069(d), thus subjecting Nautilus
to civil penalties under section 20 of the CPSA, 15 U.S.C. 2069.
III. Nautilus' Response
29. Nautilus denies the staff's allegations that it violated the
CPSA as set forth in paragraphs 4 through 27 above.
30. Nautilus believed that injury reports about the backboard bench
and incline support breakage were consistent with the type of injuries
associated when exercising with the type of exercise equipment
identified in paragraphs 4, 13, and 21. With respect to the seat pin,
Nautilus believed that the reports of seat pin disengagement did not
reflect a product defect, but instead reflected consumer error in
removing and repositioning the seat pin. The product change made in
August 2002 to the incline support bracket was to address warranty
claims, not a recognized risk of injury.
31. Nautilus denies that a defect in any of its products caused
injury to any person, or that it knowingly violated the reporting
requirements of the CPSA. Nautilus is entering into this Agreement to
resolve the staff's claims without the expense and distraction of
litigation. By agreeing to this settlement, Nautilus does not admit any
of the allegations set forth above in this Agreement, or any fault,
liability or statutory or regulatory violation.
IV. Agreement of The Parties
32. The Consumer Product Safety Commission has jurisdiction over
this matter and over Nautilus under the Consumer Product Safety Act, 15
U.S.C. 2051 et seq.
33. This Agreement is entered into for settlement purposes only and
does not constitute an admission by Nautilus or a determination by the
Commission that the products referenced in paragraphs 4 through 26
contain or contained a defect or defects which could create a
substantial product hazard or create an unreasonable risk of serious
injury or death, or that nautilus knowingly violated the CPSA's
reporting requirements.
34. In settlement of the staff's allegations, Nautilus agrees to
pay a civil penalty in the amount of $950,000.00 as set forth in the
incorporated Order.
35. This Settlement Agreement and Order resolves the failures to
report set forth in paragraphs 4 through 29, above.
36. Upon final acceptance of this Agreement by the Commission and
issuance of the Final order, Respondent knowingly, voluntarily, and
completely waives any rights it may have in this matter (1) to an
administrative or judicial hearing, (2) to judicial review or other
challenge or contest of the validity of the Commission's actions, (3)
to a determination by the Commission as to whether Respondent failed to
comply with the CPSA and the underlying regulations, (4) to a statement
of findings of fact and conclusions of law, and (5) to any claims under
the Equal Access to Justice Act.
37. Upon provisional acceptance of this Agreement by the
Commission, this Agreement shall be placed on the public record and
shall be published in the Federal Register in accordance with the
procedures set forth in 16 CFR 1118.20(e). If the Commission does not
receive any written objections within 15 days, the Agreement will be
deemed finally accepted on the 16th day after the date it is published
in the Federal Register.
38. The Commission may publicize the terms of the Settlement
Agreement and Order.
39. The Commission's Order in this matter is issued under the
provisions of the CPSA, 15 U.S.C. 2051 et seq., and that a violation of
this Order may subject Nautilus to appropriate legal action.
40. This Settlement Agreement may be used in interpreting the
Order. Agreements, understandings, representations, or interpretations
apart from those contained in this Settlement Agreement and Order may
not be used to vary of contradict its terms.
41. The provisions of this Settlement Agreement and Order shall
apply to Nautilus and each of its successors and assigns.
42. This Settlement Agreement and Order shall expire and have no
force or effect if it is not provisionally accepted by the Commission
on or before April 2nd, 2005.
[[Page 20110]]
Respondent, Nautilus, Inc.
Dated: March 28, 2005.
Wayne Bolio,
Senior Vice President-Law and General Counsel, Nautilus, Inc., 1400
NE, 136th Avenue, Vancouver, WA 98661.
March 28, 2005.
Erika Z. Jones,
Esquire, Attorney for Nautilus, Inc., Mayer, Brown, Rowe & Maw LLP,
1909 K Street, NW., Washington, DC.
Commission Staff.
John Gibson Mullan,
Assistant Executive Director, Office of Compliance, Consumer Product
Safety Commission, Washington, DC 20207-0001.
Eric L. Stone,
Director, Legal Division, Office of Compliance.
March 28, 2005.
Dennis C. Kacoyanis,
Trial Attorney, Legal Division, Office of Compliance.
Order
Upon consideration of the Settlement Agreement entered into between
Respondent Nautilus, Inc. and the staff of the Consumer Product Safety
Commission; and the Commission having jurisdiction over the subject
matter and Nautilus, Inc.; and it appearing that the Settlement
Agreement and Order is in the public interest, it is
Ordered that the Settlement Agreement be, and hereby is, accepted;
and it is
Further Ordered that upon final acceptance of the Settlement
Agreement and Order, Nautilus, Inc. shall pay to the Commission a civil
penalty in the amount of $950,000 within twenty (20) days after service
upon Respondent of this Final Order of the Commission.
Provisionally accepted and Provisional Order issued on the 4th
date of April, 2005.
By Order of the Commission.
Todd A. Stevenson,
Secretary, Consumer Product Safety Commisison.
[FR Doc. 05-7682 Filed 4-15-05; 8:45 am]
BILLING CODE 6355-01-M